“This will be the biggest foreign investment in the retail segment till now and will provide an opportunity to Indian small and medium enterprises in a wide range of labour intensive sectors for integrating into global value chain. On the other hand, it will also provide a diverse choice for the Indian consumers for a wide range of products,” Anand Sharma, commerce and industry minister, said.

“This decision has once again re-affirmed the commitment of the government for maintaining a liberal economic agenda,” said Sharma, who described the CCEA approval as “historic”.

Last year, the government had eased foreign investment norms allowing 100% FDI in single brand retail and had removed some of the restrictive conditions including dropping the mandatory 30% sourcing of goods from Indian small enterprises for single brand retail trading.

IKEA, with more than 300 stores across the world and an annual revenue of 27.5 billion euros (about Rs. 190,000 crore) had also sought approval to sell items such as upholstery and other accessories, consumer electronics, leather products, and lifestyle products, food and beverages at cafes in its premises.

IKEA had sought permission to set up cafes and restaurants inside all its stores in India, in line with its global concept.

The government has allowed the company to run food cafes but has prohibited it from selling packed food.